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Your company currently has a bond issue outstanding with 13 years to maturity, a face value of $1,000 that trade for $1,042. The total face value amount outstanding is $5,720,000 and the expected return on the bonds is 3.79%. Your company has 507,000 shares of common stock outstanding. The shares have a beta of 1.26, and currently sells for $12/share. Treasury bills yield 1.35% and the expected rate of return on the S&P 1,500 index is 6.25%.  The corporate tax rate is 26%.  What is the WACC?

Your company currently has a bond issue outstanding with 13 years to maturity, a face value of $1,000 that trade for $1,042. The total face value amount outstanding is $5,720,000 and the expected return on the bonds is 3.79%. Your company has 507,000 shares of common stock outstanding. The shares have a beta of 1.26, and currently sells for $12/share. Treasury bills yield 1.35% and the expected rate of return on the S&P 1,500 index is 6.25%.  The corporate tax rate is 26%.  What is the WACC?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
Problem 15P
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Your company currently has a bond issue outstanding with 13 years to maturity, a face value of $1,000 that trade for $1,042. The total face value amount outstanding is $5,720,000 and the expected return on the bonds is 3.79%. Your company has 507,000 shares of common stock outstanding. The shares have a beta of 1.26, and currently sells for $12/share. Treasury bills yield 1.35% and the expected rate of return on the S&P 1,500 index is 6.25%.  The corporate tax rate is 26%.  What is the WACC? 

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